Managing a product’s lifecycle is crucial for keeping your demand plans accurate and aligned with real-world changes. Let’s dive into some of the key components involved:
Marketing efforts are usually most intense during the product introduction phase. For demand planners, aligning with marketing is essential to ensure the supply chain can respond to the initial demand spikes. Marketing campaigns, promotions, and advertising can significantly influence demand, and sometimes the forecasts from marketing are overly optimistic.
Forecasting impact: Marketing initiatives often cause temporary spikes in demand, so it’s important to factor these into your short-term forecast. Estimating the right ramp-up is crucial.
Tracking performance: Use actual sales data to see how well the market is responding to marketing efforts and adjust your forecasts accordingly.
Cannibalization: Be aware that new product launches can eat into the sales of existing products. Make sure to account for this in your plan.
Managing the phase-in and phase-out process is one of the trickiest parts of portfolio management.
Phase-in considerations: When a new product is introduced, base your initial forecasts on the performance of similar products. Adjust for current market conditions, customer feedback, and any promotions that might be in place. Since trends and seasonality can take time to develop, it’s smart to use patterns from the old product to help guide the forecast.
Phase-out considerations: Closely monitor products that are being phased out to avoid overstocking and minimize write-offs. Set a phase-out date in your demand plan and stop generating new forecasts after that point, taking current inventory levels into account.
Sometimes, updates to product packaging require the creation of new SKUs, even if the product inside stays the same. This adds complexity to the demand planning process because you’ll need to manage the transition between old and new versions.
-> Forecast based on historical data: Obviously, if you’ve had similar packaging updates before, look at historical sales data to guide your forecast for the new version. This will help you anticipate any changes in demand.
The Sales & Operations Planning (S&OP) process provides the cross-functional alignment needed to make informed decisions about new product introductions, portfolio reviews, and phase-out strategies.
Consensus on new product launches: S&OP meetings are where initial demand forecasts and purchase quantities for new products are established.
Phase-in phase-out planning by Arkieva (more from an inventory planning perspective rather than pure demand planning): https://blog.arkieva.com/phase-in-phase-out-planning/
Product lifecycle management by Slimstock: https://www.slimstock.com/blog/product-lifecycle-management/
New Product Forecasting & Planning Benchmark Report: Lifecycles Shorten, Forecasting Becomes Harder by IBF: https://demand-planning.com/2017/12/18/new-product-forecasting-planning-benchmark-report-lifecycles-shorten-forecasting-becomes-harder/